Research On Airline Pricing Strategy For Callable Mechanism

Because of the aviation industry with characteristics of high fixed costs, low marginal costs and perishable inventory, Airlines have to dig deeper to rationalize the limited resources within short-term. As prediction has unavoidable error and the inevitable negative effects of overbooking become more and more obvious in recent years, flexible strategies have been paid more attention. This thesis mainly researches on the callable mechanism which is one of the flexible control mechanisms for airlines to hedge against uncertainty in future high-fare demand, and the optimal pricing policies. And it is a rich topic in the future research.In this paper, firstly, we present the new problems in the process of airlines management on the basis of summarizing the existing research results on the revenue management; and we introduce the callable mechanism and briefly describe the production and principles of it; Secondly, we analyze the feasibility of the mechanism in China's civil aviation market, mainly through economic point of view, the consumers'psychological point as well as the hardware and software environment. we prove it's feasible to apply such flexible control mechanism in recent years; Thirdly, we introduce the degradation cost to measure the cost of recalling risk; and then on the basic of the multi-level theory of differential pricing, and assuming that compensation is ahead of the recalling, we establish the static pricing models on linear or stochastic demand respectively; At last search algorithm are used to solve the nonlinear programming problem, and Matlab software used to analysis it.Besides this study based on the specialty of domestic aviation market and the trends, the solution also focuses on the correctness and simplicity, so the solution has a strong value. In addition, from the findings, you can find it has a significant economic and social value to study the subjects on setting of callable fare products, the corresponding compensation expense and the airline pricing.